A fight between China Hawks could threaten US AI dominance Opinion

Last week, news reports suggested that the Commerce Department may restrict exports of semiconductor chips focused on artificial intelligence to the United Arab Emirates (UAE) and other countries. This comes after it emerged earlier this year that government national security experts were quietly conducting a broader review of Microsoft's proposed licenses to complete its deal with G42, the UAE data center giant.

These potential restrictions reflect deep ambivalence within the Biden administration over the export of AI technology and, in particular, the $1.5 billion G42 deal. How the administration resolves this dispute will have implications for U.S. anti-China strategy, U.S. posture in the Middle East, and U.S. competitiveness in AI. We believe a forward-thinking approach to foreign partnerships would best advance U.S. AI dominance.

The battle over AI foreign policy among China hawks boils down to this: A faction in the administration, led by Commerce Secretary Gina Raimondo, believes that the U.S. must allow foreign partners access to our AI technology to undermine Chinese dominance in it area to prevent. This includes everything from high-tech routers and network switches to railways that carry critical minerals like copper from African mines.

President Joe Biden's planned visit to Angola in December reflects the priority this administration is placing on massive investment in Africa's Lobito Corridor to curb Chinese influence and, in particular, to facilitate Western control of copper.

The other faction, led primarily by the Department of Defense and the National Security Council's Technology Directorate, emphasizes the danger of widespread distribution of America's most advanced technologies and urges caution.

Raimondo's negotiations earlier this year for Microsoft to invest in G42 are at the heart of the dispute. The Emiratis are seeking a “marriage” with the US in artificial intelligence, and Raimondo’s agreement requires the G42 to “rip and replace” Chinese equipment with Microsoft infrastructure and cut ties with Chinese investors. The G42 deal also gives Microsoft access to global markets like Kenya, where G42 is expanding and where experts believe AI could help fight extreme poverty, and offers Biden an opportunity to deepen U.S. ties in the Gulf region, while China is making significant progress in the region.

On the other side of this debate are national security experts who are concerned that China could gain access to advanced U.S. chips through data centers in the Middle East. According to press reports, several national security officials slowed down granting licenses to Nvidia and other chipmakers in the Middle East to conduct “a national security review of AI development in the region,” and Microsoft continues to wait for export licenses for its chips to implement the G42 deal.

These officials are advocating a slow approach to “develop a comprehensive strategy for deploying the advanced chips abroad,” and they are likely buoyed by stories of China gaining access to advanced Nvidia chips through leases with Oracle. Several members of Congress have recently amplified these concerns and called for an investigation into the Microsoft deal.

In this group's view, giving companies like G42, which was a Chinese partner just a few months ago, access to the crown jewels of U.S. technology is short-sighted. They want more convenience when using these chips and according to a recent study Financial Times Editorials worry that “the Gulf states are closely linked to China.”

While the Raimondo approach carries the risk of technology leaks, the “go slow” approach contradicts market realities and could ultimately undermine the very goals its proponents seek to advance. Fundamental to the protectionist approach is the belief that the US can maintain control over its technology while maintaining its market position. However, these goals are contradictory. A slowdown in U.S. exports could ultimately lead to consumers turning to Chinese technology. Countries like the United Arab Emirates could settle for “good enough” Chinese solutions if they don’t have access to superior U.S. technology.

Furthermore, the UAE has made it clear that it is open to any restrictions proposed by the US, and for Raimondo there are opportunities to stem the loss of American technology while deepening ties with the Gulf.

Even if the administration ultimately awards the Microsoft licenses for G42, the debate over AI exports will spill over into future administrations as new technologies and potential partnerships emerge. A Harris or Trump administration will likely have to grapple with issues such as foreign companies like MGX acquiring a stake in U.S. companies. Meanwhile, China will not sit idly by while the US hammers out its export policy. Rolling the dice now on partnerships like the G42 agreement could be crucial to ensuring U.S. dominance. The USA should seize this opportunity.

Daniel Silverberg is Managing Director at Capstone and Senior Adjunct Fellow at the Center for New American Security. Elena McGovern is co-leader of Capstone's national security practice.

The views expressed in this article are the author's own.